The Time is Now To Get On The Road To Retirement Savings

by Fred Dolan

In case you haven’t noticed, our lives go by in a flash. Time is sneaky. When we are bored, a day can seem endless. By the same token, years can pass by quickly; and we wonder “Where did the time go?” This is why we must keep focused and be ready for what life holds for us when it’s time. One thing that many people fail to prepare for is their retirement.

What do you do when you’re suddenly in your 50’s, you’re looking to retire in a few years and you have nothing saved for the rest of your life? Currently, there’s Social Security where the average check at the beginning of 2012 was $1,230. Can you live on $1,230 a month? More and more retirees are finding it unrealistic, so they are pushing back their retirement age and continuing to work far past the time they had anticipated. Some people are even resigned to the fact that they will never be able to quit work and retire. Many seniors continue to work because they want to. It provides them with a purpose, brings them satisfaction, and provides a little spending money on the side. It’s a whole different ballgame when you have to keep working just to survive.

Retirement is also getting more complicated because we are living longer. It’s not out of the question that if you retire at 65, you could easily be looking at 25 to 30 additional years. Each of those years needs to be funded. The point here is that you need to be focused on your retirement now, no matter what your age. The younger you are when you make a commitment to start saving, the better off you’ll be. It seems that most people put off saving for their retirement until it’s almost too late. In the most recent figures from the Federal Reserve, the median family ages 55 to 64 had $98,000 in retirement accounts. Breaking this down, if they wanted the $98,000 to last 25 years and it was earning a 5% rate of return, the annual withdrawal in today’s dollars, averaging in a 3.5% rate of inflation would only net them an additional $4,696.97 a year, for a grand total of $19,456.97 with their Social Security. Certainly not a princely sum to live on.

More and more people are now working for companies that do not or no longer provide a company-sponsored retirement plan. If you are fortunate enough to work for a company that does, make sure you maximize this option for your future. Many plans allow you to put in a small percentage of your paycheck and the employer will match a certain portion of those deposits. Don’t leave anything on the table. Put as much of your paycheck into the plan as you are allowed. You’ll be amazed at how quickly your funds will grow.

For everyone else, the first thing you need is a plan. A good place to start is to talk to an expert. Financial counselors are available. In fact, check with your financial institution. At Ohio’s First Class Credit Union, you can consult with an advisor from Cedar Brook Financial Partners, LLC. While you are there, open a saving account and start putting money aside. Saving does not come naturally or easily for many people, so the habit needs to be cultivated.

Many people wonder where the money will come from to invest in a retirement fund. No one said this was going to be easy. Living below your means with no debt is the optimal place to be, so money is available to sock away. Again, this is an attitude that must be cultivated in most people so that it becomes a way of life.

Here’s another important tip. Once the money is in a retirement account, you never touch it. Consider it gone. It does not exist until you are ready to retire. Once you break the sacred seal on that account, you will always be tempted to do it again. Don’t go there.

It’s never too early to start putting money away, in fact, the sooner the better. You can never save enough because even as your retirement dollars are growing, inflation is eating away at the value of those dollars you’ll spend in the future.

All of this sounds like it’s a hard climb to retirement, but no one ever said that something worthwhile was easy to obtain. Just keep focused on the fact that you won’t have to exist on $1,230 a month from Uncle Sam and that you will also avoid having to live in one of your children’s basements. Start now! It’ll be worth it.

Fred Dolan

Fred Dolan manages marketing for Ohio's First Class Credit Union, working with Credit Union President Jeff Spada and the staff.